Those who have been keeping up with Kim Kardashian will be shocked to discover that she has recently been fined over a million dollars for advertising cryptocurrency on her Instagram page, without revealing she was getting paid for it.
Per a recent BBC report, the reality TV star and businesswoman and others - including boxer Floyd Mayweather Jr, basketballer Paul Pierce, and EthereumMax creators - had allegedly collaborated to "misleadingly promote and sell" cryptocurrency EthereumMax. They had apparently not disclosed that they'd received $250,000 for promoting the crypto online.
Kardashian had posted about EthereumMax in May this year, captioning her post: "Are you guys into crypto???? This is not financial advice but sharing what my friends just told me about the EthereumMax token! A few minutes ago EthereumMax burned 400 trillion tokens - literally 50% of their admin wallet giving back to the entire E-Max community," per Business of Business.
It is alleged that the promotion was part of a larger "pump and dump" scheme, designed to increase EthereumMax's price before selling to investors.
The 41-year-old has now agreed to pay a $1.26 million fine to the US Securities and Exchange Commission (SEC), and will not be promoting cryptocurrency for three years.
"This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto asset securities, it doesn't mean that those investment products are right for all investors. We encourage investors to consider an investment's potential risks and opportunities in light of their own financial goals," Gary Gensler, the chair of SEC said.
The mom-of-four's attorney told the BBC about the deal: "Ms Kardashian is pleased to have resolved this matter with the SEC."
"Kardashian fully cooperated with the SEC from the very beginning and she remains willing to do whatever she can to assist the SEC in this matter. She wanted to get this matter behind her to avoid a protracted dispute. The agreement she reached with the SEC allows her to do that so that she can move forward with her many different business pursuits," the lawyer added.
In a recent YouTube video from SEC, Gensler states: "Celebrity endorsements... don't mean that an investment product is right for you or even, frankly, that it's legitimate."
He goes on to say: "Even if a celebrity endorsement is genuine, each investment has its own risk and opportunities. When it comes to crypto, remember many of these are highly speculative assets. You may be wondering if it's right for you or even if it might be a scam."
Kardashian is not alone in copping flak for promoting scams on Instagram - Gwyneth Paltrow came under fire after promoting a Q and A with the CEO of a cryptocurrency exchange app called Abra.
The informational article, entitled 'The Basics of Bitcoin and Cryptocurrency - and How to Invest', was published on Paltrow's lifestyle website goop. However, the actress failed to state that she just happened to serve as an advisor for the company.
Per Forbes, Kardashian is worth an estimated $1.8 billion which makes a $1.26 million fine, as CNN points out, the equivalent of a $100 fine for a typical US family (who have a net worth of around $122,000).